Credit Unions vs. Banks
Credit Unions and Banks tend to get lumped together when it comes to choosing financial institutions. But there are some key differences. Here are some of the factors that differentiate credit unions from banks.
Credit Unions:
- Member Owned – Credit Unions are owned by their members, and there are perks that go along with it, including more saving and higher gain.
- Member-Based Customers – To have an account at a credit union, it is required to be a member. Each credit union has different requirements for their members. If you meet those requirements, you can become a member and reap the benefits that go along with it.
- Lower Loan Rates and Higher Savings Rates – Credit Unions tend to have lower interest rates for loans and higher interest rates for savings accounts than banks. This gives their members more opportunities to save money and be financially successful.
- Lower Fees – Credit Unions also tend to have lower fees. They aren’t a For-profit organization, so they are there to keep fees low for their members.
- Community Focused – Credit Unions tend to stress the importance of community and partnership between them and their members. This means going above and beyond to serve their members.
Banks:
- Shareholder Owned – Most banks are owned and operated by a board of shareholders. This means they have a stake in the company, usually in the form of money. The board of shareholders do not have to be members of the bank that they oversee.
- Open Membership – It is rare for banks to have requirements to become a customer. Banks tend to have a larger amount of customers than credit unions since they aren’t membership based.
- Higher Loan Rates and Lower Savings Rates – Since banks are not owned by their members, decisions are not always made with the customer in mind. This can result in rates that are not as advantageous to their customers.
- Higher Fees – Banks tend to have higher fees for their customers since they are a for-profit business.
- For Profit Business – Banks are for-profit businesses, this means that they normally have a goal of maximizing profits for their shareholders.
Learning the differences between these two financial institutions will help you decide where the best place for you to house your accounts will be.